In our previous post, we talked about the basics of real estate purchase agreement. Now, we’re going to learn more about it by discussing earnest money deposit and closing expenses while answering some of the most frequently asked questions about real estate purchase agreements.
So, What Is An Earnest Money Deposit
Consider earnest money as a deposit made in good faith by a buyer to a seller to demonstrate the buyer's commitment to their deal to buy a house. A buyer may withdraw from this deal at any time but will forfeit the earnest money deposit, save if the seller fails to satisfy specified restrictions.
The purchase agreement will specify how much earnest money is needed for the real estate contract. In a sense, it acts as insurance for sellers who usually want to make sure they aren't wasting their time or missing out on other chances by pursuing a contract that won't close.
To prevent any problems and guarantee that it is distributed properly and on schedule, this earnest money is often kept in escrow by a third party. When you close on the property, any funds deposited into escrow will be used for your closing expenses or down payment.
What Are Closing Expenses?
Closing costs are the additional charges that purchasers and sellers must pay in order to finalize a real estate transaction. Loan origination fees, discount points, appraisal fees, title search fees, title insurance, surveys, taxes, deed recording fees, and credit report fees are a few examples of these expenses. Three business days prior to a scheduled closing or settlement date, lenders are required by law to give buyers a closing disclosure.
What fees apply to closing? They are essentially processing costs and ongoing costs that you will pay to your lender after you close on a home.
Amounts for typical expenses including home appraisals, title searches, property taxes, homeowners insurance, lender's fees, and ownership transfers are included in closing costs. Your purchase agreement should specify who is responsible for paying these closing charges (parts of which may be divided between the buyer and seller).
Final closing fees may range from 3% to 6% of the cost of a home.
Real Estate Purchase Agreements FAQs
The most frequently asked queries about real estate acquisition agreements are listed below.
Does a real estate acquisition contract require notarization?
A real estate purchase agreement is not filed with county records, so it does not need to be notarized in order for it to be legally binding.
Can a real estate agreement be canceled?
When the option is specified in the real estate contract or when the laws of your state permit it, a real estate contract may be ended. State laws typically permit the termination of a contract when a seller omits to disclose any significant problems with the property.
The purchase agreement's cost is borne by who?
The costs involved with creating this contract are normally covered by the seller's agent commission charge, which is paid as part of the closing costs.
The terms and conditions under which a property will be sold are clearly spelled out in a real estate purchase agreement, which is a binding legal instrument. It's created to assist you prevent hitches by taking into consideration aspects related to a property purchase and sale. It's built to safeguard both buyers and sellers and ensure a smooth transaction.
As you go about buying or selling a home, being aware of the fundamentals of this document can help you avoid any potential hazards.